PowerTrend Brief: Generating Profits While the Consumer Gets Punched in the Gut

Chris Versace

Chris Versace is a financial columnist and equity analyst with more than 20 years of experience in the investment industry.

With the International Consumer Electronic Show (CES) finished, there is no shortage of wrap-up articles touting the latest whiz-bangs that will be soon hitting the market. For those of you who listened to my PowerTalks with Gary Shapiro, president and CEO of the Consumer Electronics Association and Gary Martin of General Motors (GM), there really weren’t that many surprises coming out of the largest trade show in North America. That’s one of the reasons why I launched PowerTalk — to help individual investors get behind the scenes and in the know. Conversations such as those are useful for gleaning insights and confirming data points that we can add to our investment mosaic. I don’t think I’ve ever had a conversation with a top official like that where there wasn’t something useful to be had when looking at the stock market.

While there appear to be a number of ways to invest on the “news” coming out of this year’s International CES, smart investors recognize that a number of those products only will be hitting the shelves in the back half of the year. Not only that, but several of the announced products, such as Sony’s (SNE) new 55-inch and 65-inch 4K TVs were announced at a “more accessible price range” than the 84-incher’s $25,000. While that sounds impressive, one has to wonder what Sony management is thinking, given the slow growth nature of the economy and the tough shape the domestic consumer is in.

Did you notice the modest drop in your take-home pay now that the payroll tax holiday is over?

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If you haven’t yet, you will before too long.

That drop, along with expected delays in getting federal income tax refunds and the continued rise in food prices, will hit consumers where it counts even though gas prices had a nice fall during 4Q 2012. As subscribers to PowerTrend Profits are aware, a number of emerging market economies, such as China, Brazil, Indonesia and others, are rebounding. While that rebound means better things for the global economy, it also means greater demand for gas and other scarce resources. According to Energy Information Administration data, it looks like the drop in the price of gasoline at the pump has bottomed. In the last few weeks, those prices once again have started to climb.

To capitalize on those rebounding economies and improved industrial demand, I’ve added Scarce Resource PowerTrend positions in both PowerTrend Profits and ETF PowerTrader. Subscribers to those products already are realizing the benefits. One ETF PowerTrader play alone led to a return of more than 400% in only several weeks and I’m busy investigating a number of opportunities ahead.

As we turn our heads to focus on the week ahead, the data flow is going to pick up dramatically on both the economic and earnings fronts. While some people know this reality, it bears stating — earnings reports in January can be the most crucial and the most insightful largely because of the business outlook and competitive guidance for the coming year. While normally we dissect, compare and contrast the views shared during earnings season that are issued from a company’s partners, customers, suppliers and competitors, it’s far more intense this time of year. In other words, buckle up!

To read my e-letter from last week, please click here. I also invite you to comment about my column in the space provided below.

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Sincerely,

Chris Versace
Editor, PowerTrend Brief

The following is a more detailed view on the coming week’s key economic indicators, as well as those companies reporting their quarterly results which will be closely scrutinized:

Monday, Jan. 14
Majesco Entertainment (COOL)
SemiLEDs Corp. (LEDS)
PPG Industries (PPG)

Tuesday, Jan. 15
Retail Sales (December)
Producer Price Index (December)
Empire Manufacturing Index (January)
Business Inventories (November)
Forest Laboratories (FRX)
Interactive Brokers (IBKR)
Lennar Corp. (LEN)

Wednesday, Jan. 16
MBA Mortgage Index (Weekly)
Consumer Price Index (December)
Industrial Production & Capacity Utilization (December)
NAHB Housing Market Index (January)
Fed’s Beige Book (January)
The Bank of New York (BK)
Comerica Inc. (CMA)
eBay Inc. (EBAY)
Goldman Sachs (GS)
JPMorgan Chase & Co. (JPM)
Kinder Morgan (KMI)
U.S. Bancorp (USB)

Thursday, Jan. 17
Initial and Continuing Jobless Claims (Weekly)
Housing Starts & Building Permits (December)
Philadelphia Fed Index (January)
ASML Holding NV (ASML)
American Express (AXP)
Bank of America (BAC)
BB&T Corp. (BBT)
Citigroup (C)
Capital One Financial (COF)
Fastenal Co. (FAST)
Fifth Third Bancorp (FITB)
Intel Corp. (INTC)
PNC Financial Services (PNC)
Xilinx Inc. (XLNX)

Friday, Jan. 18
Michigan Sentiment Index (January)
Rockwell Collins (COL)
General Electric (GE)
Johnson Controls (JCI)
Morgan Stanley (MS)
Parker Hannifin Corp. (PH)
Schlumberger Ltd. (SLB)
State Street Corp. (STT)

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Last week, U.S. markets ended the week slightly in the black, with the S&P 500 up 0.38% and the Dow Jones Industrial Average rising 0.40%. In contrast, the MCSI Emerging Markets Index pulled back from its recent bull run, ending the week down 1.16%. The biggest gainer in your portfolio was Bank of Ireland (IRE) -- soaring 16.95%, as the Irish recovery gains traction. Last week's recommendation, Chinese portal Qihoo 360 Technology Co. Ltd (QIHU), jumped 4.20

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